On October 9th, the Fengcheng Salt Chemical Co., Ltd. in Fengxian County, Xuzhou, Jiangsu Province, announced internally that it would cease production and operation. Nearly a thousand workers are facing job transfers or compensation arrangements. Workers revealed that everyone hopes to take the money and leave, with a wait-and-see approach for the future.
Hundreds of workers gathered at the company’s gate on October 8th to find that their access cards had been deactivated, making it impossible for them to enter the factory premises. Mr. Gao, one of the workers, told a reporter that dozens of police cars arrived, and that there was a commotion on the 8th. The boss resorted to delaying tactics, leading to the workers causing a commotion. Eventually, officials from the county came and assured the workers of receiving legal compensation. Gao said, “The videos I posted were tracked down by internet police, asking me to delete them.”
According to reports, on September 28th, the company announced a production suspension and holiday notice, citing the impact of market conditions and the company’s operational status. Production was scheduled to cease from October 1st with a resumption date to be notified separately. However, workers believed the company was on the brink of bankruptcy and viewed this decision as a tactic to delay and avoid the corresponding compensation. Therefore, after the National Day holiday, they went to the company to discuss compensation solutions, only to find themselves unable to enter the factory premises.
Under pressure from the workers’ demands for their rights, the company convened all employees on the 9th to announce the compensation plan.
In the company’s notice, it was stated that employees were required to gather in the administrative cafeteria at 9 a.m. On the 9th, it was prohibited to gather outside the factory and to take photos or videos inside the administrative area. They were also asked to minimize public opinion.
The company further announced that it would no longer resume production and operation, offering compensation according to certain conditions. The compensation standards were based on the average annual pre-tax salary for a normal life, to be paid in two installments. Amounts below 50,000 yuan would be paid in a single installment, while longer years of service would be compensated in two installments. All compensation amounts would be supervised and verified by the relevant departments in the county’s economic development zone.
Regarding the pension contributions upon employment termination, the company is currently under discussion. Bonuses from May and August would be sought after, and salaries from September and October would be paid on time on the 15th of the following month (without bonuses).
The company also requested that workers be given priority for transfer to affiliated companies within the group (Fengcheng Salt Chemical Group’s other sectors, and units under the Suyan Group).
Regarding the compensation plan, Mr. Gao stated that all workers were unwilling to transfer to other locations as they preferred to “take the money and leave.”
“We are all reluctant to transfer. If we are sent to work elsewhere, we would rather wait for compensation. Based on the years of service and income, the compensation generally amounts to 60-70,000 yuan, which is acceptable. It’s better than receiving nothing,” Gao said.
He also mentioned that the company has around 800 to 900 workers, all in their forties or fifties. Given the current unfavorable economic environment and difficulty in finding jobs, everyone is feeling lost and can only take it one step at a time.
Regarding the timeline for compensation payments, the company has not provided a clear schedule. Mr. Gao mentioned their concerns about the company’s financial situation, which might lead to delays in the compensation payouts.
Established on August 9, 2005, with a registered capital of 980 million yuan, the company is located in the Fengxian Economic Development Zone. The legal representative is Zhong Ping, and it is a medium-sized chemical enterprise mainly engaged in rock salt mining, brine transportation and sales, and deep processing of salt chemical products. The company’s main products include caustic soda, ammonium chloride, and industrial salt. In 2011, the company officially launched a caustic soda project with an annual output of 500,000 tons. In 2024, it was recognized as a Class A taxpayer, holding three trademarks, 11 patents, and six software copyrights.
Regarding the current situation of the company facing closure, Mr. Gao mentioned that the main reason was overcapacity, with costs exceeding selling prices, making it impossible to make a profit.
“The more we produce, the more we lose. The cost is 1,300 yuan per ton, but now we can only sell for over 800 yuan. In the past, when the market was good, we could sell it for over 3,000 yuan per ton. There is overcapacity.”
It is reported that the salt chemical industry in mainland China is currently facing a situation where prices have fallen below production costs, resulting in losses as soon as production begins. Taking caustic soda, a core product in the salt chemical industry, as an example, market prices have plummeted from a high of over 3,600 yuan/ton in 2021 to a low of around 900 yuan/ton in 2026. This price has fallen below the cost line for the vast majority of traditional ammonia and soda ash companies. Industry giants like Salt Chemical and Shandong Haihua incurred losses of over 200 million yuan in the first half of this year.
Moreover, with difficulties in receiving sales returns and fixed costs persisting, the company’s cash flow has been disrupted, leading to a vicious cycle where companies are forced to increase bank loans significantly, causing a breakdown in the capital chain.